TORONTO – Ottawa has blocked a bid by two of Canada’s largest wireless carriers to scoop up more cellular airwaves, taking the opportunity again to drive home its policy on the industry.

Thursday’s decision was relatively minor, but Industry Minister James Moore used it to reiterate he will not look favourably on the country’s three largest players accumulating spectrum licences outside of public auctions.

The decision is another indication he will also remain firm on blocking Telus Corp. from acquiring the airwaves of beleaguered startup carrier Mobilicity.

“Telus looks set to be rejected based on this,” said Dvai Ghose, head of research at Canaccord Genuity. “The Mobilicity thing will come to a head – there’s a very important point we’re going to reach and [Thursday’s decision] is a microcosm of that.”

Industry Canada denied an application by Inuksuk Wireless Partnership – a joint venture between Rogers Communications Inc. and BCE Inc. – to purchase 83 licences for spectrum in the 2300-megahertz band earmarked in part for the provision of high-speed rural Internet access.

Inukshuk applied last October to buy the licences from NextWave, which has been looking to sell its Canadian spectrum for several years.

Mr. Moore said in a brief statement the deal would lead to an unacceptable concentration of spectrum in the hands of Canada’s dominant wireless providers, counter to a framework on transfers the government published last June.

Industry Canada said if the transfer was approved, 95% of the airwaves in the 2300 MHz band would “effectively be held by Bell, Rogers and Telus.”

“We will not approve any spectrum transfer request that results in excessive spectrum concentration for Canada’s largest wireless companies, which negatively affects competition in the telecommunications sector,” Mr. Moore said.

The government formally blocked Telus’s bid to purchase Mobilicity’s spectrum last spring and has since indicated it will not relent on that position.

Mobilicity is under creditor protection and has said it may ask the court to override the government’s policy and order the transfer of its licences to a willing buyer.

On Tuesday, the Ontario Superior Court of Justice extended the period staying legal action against the carrier to March 31.

NextWave Wireless Inc. acquired 425311 Canada Inc. in 2007, a few years after the numbered company purchased the 83 licences for 2300 MHz spectrum in a two-phase public auction.

It never used the airwaves to deploy commercial services, attributing the delay in part to technology constraints related to the spectrum band.

In the summer of 2012, AT&T Inc. reached a deal to acquire NextWave for about $600-million, but some of its assets, including the Canadian spectrum, were placed into a holding company owned by its debtholders and dubbed NextWave Holdco.

In November 2012, NextWave struck a deal to sell the licences to Inukshuk for $85.9-million, according to a court decision. But a “rival carrier” then made a competing offer of $125-million for the airwaves and NextWave commenced litigation in California to set aside its deal with Inukshuk, which brought its own case in Ontario to enforce the agreement.

In September 2013, a Toronto judge ruled the case should proceed in Ontario, not California. After that, Inukshuk and NextWave apparently came to a renewed agreement as they jointly applied to Industry Canada to transfer the licences last October.

The value of the final deal was not publicly disclosed.

NextWave did not respond to requests for comment Thursday. Its licences are set to expire this year and in 2015.

“Bell planned to deploy NextWave spectrum as part of our long-range LTE rollout in rural and remote areas. We’ll adjust and foresee no impact on Bell’s overall LTE expansion,” BCE spokesman Mark Langton said in an email Thursday.

Rogers spokeswoman Patricia Trott similarly said the decision would not affect its plans to expand LTE coverage.

Both said they planned to use airwaves acquired in the recently concluded 700 MHz spectrum auction to expand rural coverage.

The government introduced a “use it or lose it” policy for spectrum in the 2300 MHz and 3500 MHz bands last November and said anyone who does not meet deployment requirements would lose their licences.

While the government seems intent on blocking their sale to any of the large carriers, there are a number of regional rural communications providers that would likely be interested in the airwaves.

If Friday's gains are anything to go by, investors are champing at the bit

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